Economy, Domestic Economy

Russians More Inclined to Expand Trade

Russians More Inclined to Expand Trade
Russians More Inclined to Expand Trade

Iran can fill the vacuum created as a result of Moscow’s dispute with the West to expand its economic ties with Russia, says Valliollah Afkhamirad, head of Iran’s Trade Promotion Organization (TPO).

“It seems the Russians are showing more willingness to open a new chapter of economic cooperation with Iran after relations between Russia and the West soured over the crisis in Ukraine,” Afkhamirad said, addressing the 49th session of Tehran’s Chamber of Commerce, Mines, Industries and Agriculture, in Tehran on Tuesday.

In recent months, Iran has been trying to boost its non-oil exports, specially agri-products, to other countries in a bid to offset the oil revenue loss resulting from falling oil prices in the international market.

Under economic sanctions imposed on Iran by the West over its nuclear energy program, Tehran and Moscow seek to forge new alliance on the economic front in an attempt to water down the impact of sanctions and stabilize their economic position in the world.

“Russian economy was shaken and the ruble has lost its value against major foreign currencies as a consequence of the sanctions imposed on its economy,” Afkhamirad said, adding that the situation has galvanized Russia to develop economic cooperation with friendly countries that have the capacity to replace the West in Russia’s foreign trade.

Falling oil prices in the international market coupled with the western sanctions have devastated the ruble. The Russian currency has lost some 40% of its value against the dollar since the beginning of 2014, with the majority of the loss incurred since the start of October.

Relationship between Tehran and Moscow took a new turn following the 1979 Islamic Revolution in Iran. Bilateral trade has been on the rise since 2001, reaching its peak in 2011. However, according to the Iranian side further expansion of trade ties with Russia will not be so easy.

“Lack of proper legal infrastructure, transit difficulties between the two countries, and high rate of tariffs that Russians impose on Iranian goods have hampered expansion of bilateral trade,” Afkhamirad noted.

Iran-Russia trade currently totals $5 billion a year, but economists say the two sides can multiply the volume of their trade exchanges. It is believed that one way to boost mutual trade is to adopt the so-called “preferential tariffs system”, which would significantly ease transaction of goods between the two countries.

The proposed system compels both sides to levy lower rates of duty on imports from each other than they often do from other countries.